How many firms benefit from a window of opportunity? Knowledge spillovers, industry characteristics, and catching up in the Chinese biomass power plant industry

Abstract

Abstract The literature on the catching up of latecomer countries has pointed at windows of opportunity as a precondition for catching up. Previous research has however failed to illuminate the determining factors affecting the number of firms benefitting from windows of opportunity. The current article addresses this gap by combining insights on the nature of knowledge spillovers with sectoral characteristics. This perspective is applied empirically by analyzing the number of firms benefitting from a ‘green’ window of opportunity in the Chinese biomass power plant industry, specifically related to changes in the institutional framework conditions in the form of a feed-in tariff and specified targets for renewable energy. The article finds that while a single Chinese firm constituted the initial phase of the catch-up cycle, domestic knowledge spillovers allowed a larger number of Chinese firms to benefit from the window of opportunity in the later stage of the catch-up cycle. The article points at the importance of combining sectoral characteristics with the degree of domestic knowledge spillovers as key determinants for the number of firms profiting from windows of opportunity.